Possible LES rate hike a 'tough pill to swallow'
Lincoln Electric System customers will have to dig deeper into their wallets and purses later this year — but just how deep won’t be known until after the utility’s administrative board meets Friday to make a recommendation to the City Council.
A rate hike of up to 12 percent, which would amount to about $108 a year for the average homeowner, was tossed out last week and then shot down like a clay pigeon by Mayor Chris Beutler, who threatened a veto.
“I simply cannot in good conscience quietly accept an increase of that magnitude in light of today’s economy,” Beutler said.
The mayor then blamed LES officials for delivering a “broadside” and said he would withdraw his proposed 1-cent city property tax rate increase.
LES Administrator and CEO Terry Bundy quickly accused Beutler of using the increase as a “scapegoat for city budget issues.”
But the mayor isn’t alone in his opposition. Some of the city’s largest businesses are in his corner, too.
“It’s a very tough pill to swallow for the employers of Lincoln, in that we just had (a 5 percent increase) this spring,” said Bob Caldwell, chairman of the Lincoln Employers Coalition.
Caldwell said a 17 percent increase in one year would cost each of the city’s largest employers “hundreds of thousands of dollars.”
His group, which comprises about 25 companies including Goodyear and Nebco, plans to meet July 30 to develop a position statement, along with budget and revenue recommendations for the city-owned utility.
“Our group wants to find a way, if it’s possible, to reduce that amount (potentially 12 percent) to protect the ratepayers,” Caldwell said, “and look for ways to make sure that LES doesn’t put us in this position again.”
An LES budget and rates committee will make its own rate recommendation to the LES Administrative Board on Friday. The public can attend the meeting but won’t get a chance to speak unless they gave the utility notice.
Shelley Sahling-Zart, LES vice president and assistant counsel, said the board could modify any committee recommendation.
LES spokesman Russ Reno said a rate hike of up to 12 percent has been discussed publicly but is not an official recommendation from the utility.
He declined to comment on Caldwell’s statement about the possibility of a 17 percent rate hike in one year and its impact on ratepayers.
LES says it needs the increase to meet an expected $9.3 million shortfall this year because of higher wholesale energy and power generation costs, reduced interest income and higher natural gas prices.
To reduce the projected shortfall, LES is proposing to use $1 million from its rate stabilization fund and cut $500,000 from its operational budget.
Other electric utilities across the nation are seeking rate increases, ranging from 2 percent to 28 percent.
And electricity bills could climb even higher next year. The U.S. Energy Information Administration, citing higher natural gas costs, projected electricity prices could climb an average of 9.8 percent in 2009.
Just how another rate increase will play out before the City Council remains to be seen. The 5 percent rate increase, which went into effect March 1, was approved on a 5-2 vote.
“Well, I don’t want to comment on the magnitude of the rate increase because I do not have enough information,” said City Councilman Dan Marvin, who voted against the hike last time.
But Marvin acknowledged wholesale prices on the spot market for electricity have increased significantly in six months. He said a representative of the council will monitor Friday’s meeting.
A national rate survey to be presented to the administrative board Friday shows LES rates are the sixth lowest out of 106 cities. On March 1, they ranked 10th.
Low-income families, senior citizens and others on fixed incomes would be hit hardest by a major increase, said Beatty Brasch, executive director of the Center for People in Need.
“Many people are already behind in paying utility bills,” Brasch said. “If their income is low, there’s no way you can do it. So, a 12 percent hike is mammoth.”
Reach Algis J. Laukaitis at 402-473-7243 or alaukaitis@journalstar.com.
A rate hike of up to 12 percent, which would amount to about $108 a year for the average homeowner, was tossed out last week and then shot down like a clay pigeon by Mayor Chris Beutler, who threatened a veto.
“I simply cannot in good conscience quietly accept an increase of that magnitude in light of today’s economy,” Beutler said.
The mayor then blamed LES officials for delivering a “broadside” and said he would withdraw his proposed 1-cent city property tax rate increase.
LES Administrator and CEO Terry Bundy quickly accused Beutler of using the increase as a “scapegoat for city budget issues.”
But the mayor isn’t alone in his opposition. Some of the city’s largest businesses are in his corner, too.
“It’s a very tough pill to swallow for the employers of Lincoln, in that we just had (a 5 percent increase) this spring,” said Bob Caldwell, chairman of the Lincoln Employers Coalition.
Caldwell said a 17 percent increase in one year would cost each of the city’s largest employers “hundreds of thousands of dollars.”
His group, which comprises about 25 companies including Goodyear and Nebco, plans to meet July 30 to develop a position statement, along with budget and revenue recommendations for the city-owned utility.
“Our group wants to find a way, if it’s possible, to reduce that amount (potentially 12 percent) to protect the ratepayers,” Caldwell said, “and look for ways to make sure that LES doesn’t put us in this position again.”
An LES budget and rates committee will make its own rate recommendation to the LES Administrative Board on Friday. The public can attend the meeting but won’t get a chance to speak unless they gave the utility notice.
Shelley Sahling-Zart, LES vice president and assistant counsel, said the board could modify any committee recommendation.
LES spokesman Russ Reno said a rate hike of up to 12 percent has been discussed publicly but is not an official recommendation from the utility.
He declined to comment on Caldwell’s statement about the possibility of a 17 percent rate hike in one year and its impact on ratepayers.
LES says it needs the increase to meet an expected $9.3 million shortfall this year because of higher wholesale energy and power generation costs, reduced interest income and higher natural gas prices.
To reduce the projected shortfall, LES is proposing to use $1 million from its rate stabilization fund and cut $500,000 from its operational budget.
Other electric utilities across the nation are seeking rate increases, ranging from 2 percent to 28 percent.
And electricity bills could climb even higher next year. The U.S. Energy Information Administration, citing higher natural gas costs, projected electricity prices could climb an average of 9.8 percent in 2009.
Just how another rate increase will play out before the City Council remains to be seen. The 5 percent rate increase, which went into effect March 1, was approved on a 5-2 vote.
“Well, I don’t want to comment on the magnitude of the rate increase because I do not have enough information,” said City Councilman Dan Marvin, who voted against the hike last time.
But Marvin acknowledged wholesale prices on the spot market for electricity have increased significantly in six months. He said a representative of the council will monitor Friday’s meeting.
A national rate survey to be presented to the administrative board Friday shows LES rates are the sixth lowest out of 106 cities. On March 1, they ranked 10th.
Low-income families, senior citizens and others on fixed incomes would be hit hardest by a major increase, said Beatty Brasch, executive director of the Center for People in Need.
“Many people are already behind in paying utility bills,” Brasch said. “If their income is low, there’s no way you can do it. So, a 12 percent hike is mammoth.”
Reach Algis J. Laukaitis at 402-473-7243 or alaukaitis@journalstar.com.
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